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Could MMC help kick-start the construction industry post-Covid-19?

In many parts of the world, homes are built the same way today as they were 100 years ago. However, change is beginning to happen in the shape of modern methods of construction (MMC). 

MMC is a broad term that covers a range of offsite manufacturing and onsite techniques that provide alternatives to traditional construction and aim to build homes more quickly and efficiently. The use of MMC varies from country to country and many factors have impacted its adoption – namely,  the cost and availability of labour, supply shortages and regulatory or government intervention.

In many global markets, the cost of adopting MMC is often higher than traditional construction, which has reduced the incentive to change. However, as the construction industry adapts post Covid-19, we could see an increased take-up.

The speed of delivery and the opportunity to catch-up for lost time will be a factor. The ability to implement social distancing while maintaining higher productivity than on-site construction will also play a part. The efficiency of construction – that is, ensuring minimal material wastage – could also mitigate any increased costs of building materials due to shortages. This could to a degree offset the cost difference for MMC.

Historically, Sweden and Japan have led the charge when it comes to modern construction methods. In Sweden, around 45 per cent of all new homes utilise off-site construction and for single-family homes, it’s closer to 80 per cent. Japan produces the highest number of homes using MMC which equates to 150-180,000 homes per annum.

 

 

In Europe, we expect the UK to see the strongest growth. The country’s construction workforce is ageing, annual housing delivery needs to increase by 24 per cent per annum to meet need and regulatory changes around energy efficiency are on the horizon.

Furthermore, there is Government support for MMC through Homes England as well as the recently launched ‘Homes for Heroes’ campaign to build 100,000 modular homes over the next five years for key workers. This will lead to increased adoption over the next decade and we expect that the proportion of housing built using MMC will rise from around 10 per cent today to closer to 20 per cent by 2030.

In the short term, the confluence of labour shortages and the need to increase housing supply will be the main drivers for increased adoption of MMC in certain markets. However, over the medium to long term, the need to tackle construction’s environmental impact will force MMCs adoption globally. 

Savills has examined the key trends set to determine future global real estate investment activity in a series of articles and interviews as part of its Impacts research programme, where the international real estate advisor studies the various social, environmental, demographic and technological ‘tipping points’ immediately facing global real estate.      

 

Further information

Read more Impacts: The Future of Global Real Estate

 

 

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